Health Alliance Plan to acquire Detroit-based Medicaid health plan

July 3, 2019

Detroit-based managed-care company Health Alliance Plan is jumping back into the Medicaid HMO business in metro Detroit, signing a deal to acquired the Detroit-based Medicaid plan Trusted HP-Michigan, the insurer said Monday.

Trusted HP, which covers 9,000 members, mostly in Wayne County, is formerly known as Harbor Health Plan. The company said the deal marks HAP's re-entrance into the state's Medicaid HMO area called Region 10, which includes Wayne, Oakland and Macomb counties.

HAP would not provide financial details of the transaction, including the purchase price.

The plans manage health care needs under state contracts for people covered under the federal- and state-funded health insurance program for the poor.

"We are thrilled to announce a return to offering a Medicaid option that serves the people of metro Detroit," Wright L. Lassiter III, president and CEO of HAP's owner Henry Ford Health System, said in a written statement. "As both a health insurer and healthcare provider, we are uniquely positioned to offer seamless, holistic care and coverage to our Medicaid population ⁠— a fully integrated approach focusing on quality and efficiency that creates lasting value for our patients and members."

Trusted HP-Michigan reported a net loss of $3.6 million on revenue of $26.9 million in 2018, according to state filings. Through the first quarter of this year, it had posted net income of $356,566 on revenue of $9.5 million.

HAP currently offers Medicaid products only the state's Region 6, which includes Genesee, Huron, Lapeer, Shiawassee, St. Clair and Tuscola counties in mid-Michigan and the Thumb, where it covers about 3,500 people. The company also said it participates in the MI Health Link Dual Demonstration Project, serving 4,500 people who are eligible for both Medicare and Medicaid in Wayne and Macomb counties.

HAP said in a statement that members of Trusted HP-Michigan will be able to keep the same doctors and use their current identification cards. The two dozen employees of Trusted HP will join HAP.

"True integration between provider and payer is extremely important to our Medicaid population," Terri Kline, president and CEO of Health Alliance Plan, said in a written statement. "We also know how critical it is to understand our members' individual needs and concerns. By uniting our dedication to both, we are creating something truly exceptional for the people of southeast Michigan and we are so excited to welcome these new members into the HAP family."

The acquisition is subject to regulatory approval and is expected to be completed in late summer, the company said in the statement.

In 2015, much of HAP's Medicaid business evaporated when it lost a state contract for about 85,000 Medicaid members in Southeast Michigan due to a decision by the state to reduce the number of plans in that area. Molina Healthcare bought the remaining business later that year. HAP had acquired what became HAP Midwest for $70 million four years before.

The deal would mark the second new owner in two years for the former Harbor Health Plan, which sold itself to Washington, D.C.-based Trusted Health Care in early 2017. The plan was formerly owned by Tenet Healthcare Corp., parent of Detroit Medical Center, which exited the health insurance business as part of restructuring.

This article was originally published in Crain's Detroit Business.